IDFC Merger: Making a case against holdco discounts

In this episode of the businessline podcast, businessline’s Hamsini Karthik is joined by the chairman of IDFC Limited, Anil Singhvi. Singhvi who played a crucial role in the IDFC First Bank merger with IDFC, isn’t very happy with this concept of holding company discounts. He shares his insights into why it is unfair to the minority shareholders, the merger process, the motivations behind it, and the potential outcomes.

Holding company discounts occur when a company operates subsidiaries without having its own business, leading to a decrease in market valuation. These discounts have reached as high as 80 per cent in the past, affecting even prominent companies like HDFC Limited, which experienced a 20 per cent discount. While such structures are often implemented to benefit promoters and improve capital structure, it raises concerns about minority shareholders' interests. 

During the discussion, IDFC’s Singhvi addresses the market's expectations regarding valuations and the reasoning behind the price at which the merger was finalized. The conversation highlights the need to reconsider the prevailing discount culture and its impact on Indian markets, hindering the progress of companies and their underlying assets. 

Furthermore, Singhvi explores the importance of passing on dividends from underlying assets to shareholders and the value derived from legacy investments. Join us as we delve deeper into these topics, gaining valuable insights into the IDFC merger and its implications for the Indian market. Listen in.  

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